Computer Arts

Get Started With Fees and Finance

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You might have the skills to pay the bills, but are you being paid fairly? Charging what's right for both parties is as vital as a good invoice system and transparent accounting, says Jerome Turner.

Graphic design isn't just about designing. Designers must know how to communicate with clients, how to run a work premises, which hardware will best suit their practice - and, of course, how to get paid at the end of a long day's work. For many people, this involves signing a contract, turning up for work and collecting a pay cheque each month - the joys of full-time employment. But for freelance designers, who must regularly quote and invoice for work, it's a very different story.

Set standard rates

If a client asks you to quote for a job, they'll expect a prompt reply. So it's important to be prepared. Work out your rates as soon as you start your freelance business, and before taking on any jobs. A designer's rates will vary according to a range of parameters. Don't be too concerned by how much other designers charge, because your work should be valued on its own merits. Directly asking what people quote could be called price-fixing and is often considered illegal. Still, it doesn't hurt to keep an eye on the market, and what your competitors are charging.

One way to work out your daily/ hourly rate is to look at a similar fulltime position at a design studio, and work out prices accordingly. However, it's not just a case of taking a pro-annum rate and dividing by the number of yearly working days, because, as any freelancer will tell you, there will be plenty of slow, thumb-twiddling days in-between. If you know you'll have regular work from reliable clients, this can help estimate how often you'll be working, and therefore your general daily rate.

The most practical way to set your fee is to remember that you have bills, living costs and rent to pay. You need money to live on, that's why you work. Try totalling everything you spend in a year and then see how much you must earn to cover that. If you would like your business to make money and grow, you will, of course, need to add to that figure. Now divide by the number of days you anticipate working in the year to calculate your personal daily rate.

Sometimes a client will set the fee for a job outright, typically with regular commissions - a magazine art editor paying illustrators £150 per illustration, for example. Consider whether this fits into your daily rate scheme (or not). If the price doesn't tally with your usual rate, is it worth doing anyway, just for the experience and to bolster your portfolio?

Work out a quote

If a client does ask you to quote for a job, research the client and the project. It never hurts to ask about the budget first and compare this figure to what you'd quote for the job. If the budget seems a little tight, consider cost-effective ways of doing the project and explain to the client how your services may differ from their original request. Don't worry about scaring them away - once they receive quotes from other designers, they'll see how unrealistic their budget was and hopefully come back to you.

On the other hand, if the budget is higher than your calculated price for the job, explain that you can do exactly what they want, but then ask them if they'd considered adding extra features or elements in the form of x, y, z? If you can generate more work for yourself and still fit into your client's budget, everyone's happy.

As for the quote itself, use your daily rate as a starting point. Make a spreadsheet to help anticipate how long the project will take. For example, Day 1: creating mock-ups; Day 2: meeting at client office to discuss ideas; Day 3: starting on the chosen design... Plan the entire project in this way, anticipating each meeting, day in front the computer, etc. If you're unsure what to charge as a day's work, ask yourself: Does time spent on this client's project mean I can't be working on another project? If so, that time is chargeable. Multiply your days/hours by your rate, and add anticipated expenses, too. This, again, should include any money you're spending on the client - including travel expenses to meetings, printing costs and sketchbooks (but not lunch).

Don't underestimate how long a job can take. Wherever unusual hardware is involved, think back to any problems you had last time you used the equipment. Also take into account any recording or rendering time. Even if this takes as much as a day, and you leave the computer to run it while you're off doing something else, include it. If you're going to a client meeting, check travel times and factor these into your calculations, too, as well as the meeting time itself.

In addition to the usual expenses, you might also need to call in a specialist to work on part of the job (for instance, a database programmer or a photographer). If it's a relatively minor contribution, ask them for quotes, and include them with yours. Of course, this depends on the project. In another case, the project might require someone else taking over, but at a much later stage. The client can organise this.

The above costing method enables you to give the client a fixed "all in" price for the job. Give them just the price and if they ask what that pays for, show them your spreadsheet, with each day accounted for. By giving them a fixed price, you're doing them a favour, because projects can drag on. Even if the client has set a tight deadline and you do everything in your power to meet it, they may inadvertently cause the job to drag - which means you earn less money for your time. There are two solutions. First, see if the client will accept a quote at the end of the project for days worked, multiplied by your daily rate. Alternatively, quote a fixed price, but cost in extra days for those, as yet unforeseen, delays.

Contracts and invoicing

Quoting usually comes before you agree a contract, particularly if you're drawing up the contract for a job. However, quotes and contracts are still related. One of the most important parts of the contract, along with the schedule and deadline, are the payment details. What's the price you're quoting and what does this pay for? How should the payment be made? Depending on the client and the ease with which they can get hold of funds, it's not unusual to request something between 25 and 50 per cent of the payment on signature of contract. This is something you can discuss after the quote is agreed - if they're happy to work with you, prepayment shouldn't be a problem.

Also watch out for jobs where clients ask you to do "a bit more" at the end of the project. You can specify in the contract that your fixed price pays for the agreed job and that is all - if they want anything else, it will be paid for according to your hourly/ daily rate, which you then quote.

Your invoice should always include: your name and contact details, and the client's; the date; a short description of what this pays for; an invoice number; any invoice/reference number the client has given you; and somewhere for the client to "sign off ".

Chasing payment

Most clients cannot act without you sending them an invoice. It's not enough to "agree" on a price via email - you'll need to send them an invoice either by email or standard mail. Then, when it comes to the agreed payment date (you could add a Payment Date category to your invoice, just to remind them of this), the client will pass this on to its financial department, or, in the case of smaller clients, hopefully pay you themselves. Keep in mind, however, that a client needs time to make payment funds available, so it doesn't hurt to send the invoice long before payment is due.

Keep a record of your sent invoices. Print off and file any you send and keep any emails containing attached invoices for later reference. If you find that your payment is slow, email or call your contact as soon as you can. They may have forgotten to pass the invoice to their financial department, or there's been a simple snag that can easily be corrected. They may even ask you to contact the financial department yourself (no problem as long as you have details for the job and your invoice number handy).

In most such cases, clients aren't sneakily holding back funds; a simple mix-up can easily be fixed with a polite call or email.